Firm Value of Indonesian Energy Companies: The Effect of ESG Disclosure, Digital Transformation, and Capital Structure

Alicia Amanda Wikaning  Tyas; Muhamad  Muslih

doi:10.58524/smartsoc.v6i3.1387

Authors

Alicia Amanda Wikaning Tyas Universitas Telkom, Indonesia https://orcid.org/0009-0008-7727-5543
Muhamad Muslih Universitas Telkom, Indonesia https://orcid.org/0000-0001-7317-371X

DOI:

https://doi.org/10.58524/smartsoc.v6i3.1387

Keywords:

capital structure, digital transformation, energy sector, ESG, firm value

Abstract

Indonesia’s energy sector faces substantial financing requirements, continued dependence on fossil fuels, and increasing pressure to strengthen sustainability and technological adaptation. This study examines the relationships of Environmental, Social, and Governance (ESG) disclosure, keyword-frequency-based digital transformation disclosure, and capital structure with firm value among energy-sector companies listed on the Indonesia Stock Exchange. A quantitative explanatory design was employed using a balanced panel of 24 companies observed from 2021 to 2024, resulting in 96 firm-year observations. Firm value was measured using winsorized Tobin’s Q, ESG disclosure using a GRI Standards 2021-based disclosure index, digital transformation disclosure using the logarithmically transformed frequency of predefined digital-related keywords, and capital structure using the total-liabilities-to-total-assets ratio. Fixed-effects panel regression was estimated using Stata 17. The results show that ESG disclosure was negatively but not significantly associated with firm value (β = −1.3022, p = 0.068), while digital transformation disclosure showed a positive but non-significant association (β = 0.2125, p = 0.268). In contrast, capital structure was positively and significantly associated with firm value (β = 3.5883, p < 0.001). The model was jointly significant, F(3, 69) = 9.66, p < 0.001, with a within R² of 0.2957. These findings indicate that the overall-leverage measure had clearer statistical relevance to firm value than the two disclosure-based measures within the observed companies and period. The study contributes to the application of signaling theory by showing that different financial and non-financial corporate signals may differ in their statistical relevance to market valuation. The findings also suggest that companies should manage liabilities prudently while improving the credibility, specificity, and outcome orientation of ESG and digital-transformation reporting.

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